European Forestry Pulse #78 🌲

Hello,

On Tuesday I wrote about €1.3 billion in fresh forest capital landing in a single week.

This issue is about the rules that capital will operate under.

Three of them locked into place in the past ten days. The EU 2040 Climate Law entered into force. The first quarterly CBAM certificate price was published. And a major forestry company showed that AI can do EUDR traceability in three minutes.

The compliance side of European forestry just hardened. The technology side just made compliance cheaper. That gap — between what the law demands and what tech can deliver — is exactly where the next two years of competitive advantage will sit.

Here's what's moving European forestry this week:

Regulation (EU) 2026/667 entered into force on April 7. The European Council formally adopted it on April 1.

The headline number: a binding 90% net greenhouse gas emissions reduction target for 2040, measured against 1990 levels. That's the most ambitious climate target any major economy has put into binding law.

But the line that matters for European forest owners is buried deeper in the text. For the first time, Article 6 international carbon credits are embedded into the core EU climate compliance architecture.

Article 6 of the Paris Agreement governs how countries — and increasingly, companies — can buy and sell carbon credits across borders to meet climate commitments. Until now, the EU treated Article 6 credits and EU compliance carbon (the EU ETS) as two separate worlds.

The 2040 Climate Law connects them.

Up to 5% of the 2040 target may be met through high-quality Article 6 credits. The pilot phase begins in 2031. Full integration follows in 2036.

That sounds far away. It isn't. Carbon credit markets price decades of expected demand into today's project decisions. A pilot in 2031 means buyers will start signalling demand in 2027 or 2028. Project developers planning 30-year forest carbon projects need to make decisions about methodology choice and verification standards now.

Look at what has happened in the past ten weeks.

In February, the EU adopted the first three CRCF methodologies — but forest-based methods were not among them (EFP #60). In March, the Carbon Removal Certification Framework regulation entered into force (EFP #76). On April 9, Verra published Version 1.1 of its Article 6 and CORSIA Label Guidance plus a buyers' guide. And on April 7, the EU 2040 Climate Law gave Article 6 credits their first home in binding EU climate law.

Each piece individually is a regulatory update. Together they form the legal backbone European forest carbon has needed for years. The CRCF tells you how forest carbon gets certified. Verra tells you how that certification maps to Article 6 and CORSIA labels. And the 2040 Climate Law tells you who has to buy it, when, and how much.

For the first time, a European forest carbon project developer can draw a straight line from "tree planted today" to "compliance buyer required to purchase by 2031."

That straight line did not exist three months ago.

If you own forests in Europe: Carbon revenue is moving from speculative side-income to a credible second revenue stream. But only for projects that meet the rising integrity bar. Generic "we plant trees" projects will not qualify. Methodology choice, baseline calculation, and additionality testing all need to match the standards European compliance buyers will demand in 2031.

If you are developing forest carbon projects: Pick your methodology with 2031 in mind, not 2026. Article 6 corresponding adjustments, host country authorisation, and Label-grade verification are no longer optional features. They are the price of entry to the European compliance buyer pool.

If you advise forest owners: Your clients are about to be approached by carbon project developers offering to register their forests. Most of those offers will not meet the integrity bar that will exist by 2031. The cost of saying yes to a bad project now is being locked out of the compliance market later. Sources: EU Council formal adoption | Verra Article 6 + CORSIA Label Guidance v1.1 | JD Supra legal analysis

On April 9, Globant and Chilean forestry giant CMPC announced a live, AI-based EUDR traceability solution running in production.

The performance numbers are striking. Manual supply chain traceability that previously took up to 12 days now runs in approximately 3 minutes. That is a 99.9% reduction in processing time.

Built on enterprise plumbing. The system runs on SAP Clean Core and the SAP Business Technology Platform (BTP). This is not a prototype or a pilot. CMPC is one of Latin America's largest forestry and pulp companies. Globant is a NYSE-listed technology services firm.

Why this matters for European foresters. This is the first publicly confirmed AI-based EUDR compliance system deployed at industrial scale by a major forest products company. With the December 30, 2026 application date now eight months away, the question for every operator is no longer "will AI handle EUDR?" The question is "how soon, and at what cost?"

If a Chilean producer can verify deforestation-free supply chains in three minutes, European producers will face the same expectation from buyers — and the same competitive pressure on margins from those who can't.

The takeaway: EUDR compliance is about to become a technology arms race. The early winners will be the operators who built their data infrastructure now, before the deadline. Source: PR Newswire / Globant

The European Commission published the first official quarterly CBAM certificate price on April 7. The figure: €75.36 per tonne of CO₂.

The price reflects the average closing price of EU ETS allowances auctioned between January and March 2026 via the European Energy Exchange.

Where this fits in the CBAM timeline. The Carbon Border Adjustment Mechanism entered full force on January 1, 2026. Importers of covered goods will begin purchasing certificates in February 2027. Until then, the quarterly price is a signal — not yet a cost. But it is the signal that everyone designing 2027 procurement contracts is now using.

Why forest professionals should care. CBAM applies to carbon-intensive construction inputs — steel, cement, aluminium, fertilisers. Every euro of embedded carbon cost added to those inputs flows through to building economics. And every euro that makes concrete or steel more expensive shifts the relative case for timber construction.

At €75.36/tCO₂, the carbon cost on a tonne of imported steel is now meaningful. By 2027, when certificates must actually be purchased, it becomes a procurement decision driver.

The takeaway: If you sell engineered wood products into European construction markets, CBAM is your friend. It is making your competitors' inputs more expensive without you having to do anything. Track the quarterly prices. (Our Tariff Calculator lets you model how it flows through to landed prices.) Source: European Commission CBAM portal | S&P Global Commodity Insights

Komatsu Forest AB finalised its acquisition of Malwa Forest AB on April 1. The original announcement came from Komatsu Ltd on March 17.

Malwa is based in Hyssna, Sweden. It builds lightweight, compact cut-to-length machines designed specifically for thinning operations on soft ground — exactly the conditions that increasingly limit Nordic harvesting seasons as winters get warmer and shorter.

Why this is bigger than a typical machinery deal. Malwa's product line addresses two structural pressures at once. Climate-driven soft-ground seasons are eroding the operational window for heavy traditional harvesters. And the rapid growth of close-to-nature silviculture across Europe means more forest owners want thinning solutions that minimise soil and stand damage.

A global heavyweight like Komatsu acquiring a specialist niche player signals where the equipment market is heading. Lightweight, low-impact thinning is no longer a niche segment. It is becoming a strategic capability that the major OEMs need in their portfolios.

The takeaway: If you manage forests in regions with shortening winter seasons or growing demand for continuous-cover forestry, the equipment market is finally catching up to your operational reality. Expect more lightweight machine investment from competing OEMs in the next twelve months. Source: Komatsu Forest Newsroom

On April 9, Verra published Version 1.1 of its Article 6 and CORSIA Label Guidance for VCS Program projects. The update reflects the latest UNFCCC and ICAO decisions on international carbon credit transfers.

Verra also released a new buyers' guide titled "Choosing the Right Article 6 Label." It helps purchasers determine when a credit is suitable for compliance use, voluntary use, or CORSIA aviation offsetting.

Why this connects directly to the Big Story. The EU 2040 Climate Law allows up to 5% of the 2040 target to be met through high-quality Article 6 credits. But "high-quality" needs a definition that buyers, regulators, and project developers can all agree on. The Verra Label Guidance is the de facto plumbing for that definition in the voluntary market — and it now feeds directly into the compliance pipeline that European forest carbon developers need to access.

If you are running a European forest carbon project and you want to be in the buyer pool that compliance buyers can legally use in 2031, the Label Guidance is now required reading.

The takeaway: The voluntary carbon market and the compliance carbon market are converging faster than most forest professionals realise. Projects that want optionality across both need to design for it from day one. Source: Verra

Map your 2031 carbon revenue scenario.

The EU 2040 Climate Law just made high-quality Article 6 credits a compliance instrument. Here is a fifteen-minute exercise for any forest owner or advisor:

The gap between the two carbon scenarios is what is at stake in the methodology and verification choices you make over the next eighteen months.

If that exercise produces a number that surprises you, you are not alone. It surprises most forest owners doing it for the first time.

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Until Thursday!

Wish you all the best: Peter

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